Financial Results for the year ended December 31, 2018 Masato - PowerPoint PPT Presentation

Financial Results for the year ended December 31, 2018 Masato Yoshikawa Director and Senior Managing Executive Officer, General Manager of Planning & Control Headquarters February 20, 2019

Voluntary Adoption of IFRS Kubota Corporation has adopted International Financial Reporting Standards (hereinafter “IFRS”) instead of accounting principles generally accepted in the United States of America (hereinafter “U.S. GAAP”) from the 1 st quarter of the fiscal year ended December 31, 2018. The figures for the fiscal year ended December 31, 2017 used in the analysis were reclassified into the figures in accordance with IFRS. (Financial results for the year ended December 31, 2018) 2

Financial Summary Variance from forecast Changes Year ended Year ended （Unit: billions of yen） (Nov. 2018) Dec 31, 2018 Dec 31, 2017 ％ ％ Amount Amount 1,850.3 1,751.0 +99.3 +5.7 +20.3 +1.1 Revenue Domestic 577.3 563.8 +13.5 +2.4 +3.3 +0.6 Overseas 1,273.0 1,187.2 +85.7 +7.2 +17.0 +1.4 10.2% 11.4% Operating 189.3 200.0 ‐10.6 ‐5.3 ‐14.7 ‐7.2 profit 10.7% 12.2% Profit before income taxes * 197.2 214.0 ‐16.8 ‐7.8 ‐12.8 ‐6.1 7.5% 7.7% Profit attributable to owners of the parent 138.6 134.2 +4.4 +3.3 ‐6.4 ‐4.4 Changes As of As of （Unit: billions of yen） Dec. 31, 2018 Dec. 31, 2017 ％ Amount 2,895.7 2,832.4 +63.3 +2.2 Total assets Equity attributable to 1,339.9 1,291.1 +48.8 +3.8 owners of the parent Gain (loss) on sales of securities is no longer recorded in the consolidated statement of profit or loss from the fiscal year ended December 31, 2018 due to the adoption of IFRS 9. For your information, the financial results for the year ended December 31, 2017 included gain on sales of securities of 8.4 billion yen. (Financial results for the year ended December 31, 2018) 3

Revenue by Reportable Segment Changes Year ended Year ended （ Unit: billions of yen ） Dec. 31, 2018 Dec. 31, 2017 ％ Amount Farm & Industrial Machinery 1,527.6 1,436.5 +91.1 +6.3 (Machinery) Domestic 308.9 294.5 +14.4 +4.9 Overseas 1,218.7 1,142.0 +76.7 +6.7 Water & Environment 292.3 285.7 +6.6 +2.3 (Water) Domestic 238.4 240.7 ‐2.3 ‐1.0 Overseas 53.9 45.0 +8.9 +19.9 30.4 28.9 +1.5 +5.3 Other Domestic 30.0 28.6 +1.5 +5.1 Overseas 0.4 0.3 +0.1 +25.6 1,850.3 1,751.0 +99.3 +5.7 Total revenue 577.3 563.8 +13.5 +2.4 Domestic revenue 1,273.0 1,187.2 +85.7 +7.2 Overseas revenue For reference: Changes excluding the effects of fluctuation in exchange [‐6.0 billion yen] >Overseas revenue in Machinery increased by 7%. Total overseas revenue increased by 8%. (Financial results for the year ended December 31, 2018) 4

Revenue by Reportable Segment (Year‐on‐Year) Machinery: +91.1 billion yen (Domestic: +14.4, Overseas: +76.7) ■ Changes in revenue by product (Billions of yen) • Sales of tractors, rice transplanters and Domestic combine harvesters increased slightly due to 40.0 an increase in market share. Domestic Overseas 35.0 • Sales of agricultural‐related products and 30.2 30.0 25.5 engines increased as well. 23.5 25.0 • Sales of tractors increased mainly in North 20.0 Overseas America and Thailand. 15.0 • Sales of combine harvesters and rice 7.8 10.0 transplanters decreased significantly due to 3.3 5.0 2.0 1.3 slump of market in China. ‐ • Sales of construction machinery (CE) and engines ‐2.5 ‐5.0 increased significantly in major markets such as ‐10.0 Farm CE Engines Others North America, Europe and China due to global equipment expansion of demand. • In Others category, sales of parts and implement and finance income increased in North America. Water: +6.6 billion yen (Domestic: ‐2.3, Overseas: +8.9) • In pipe‐related business, sales of ductile iron pipes decreased significantly, while sales of Domestic pumps and construction business increased. • In environmental business, sales of environmental plants and EPC (engineering, procurement, and construction) businesses such as exhaust gas treatment plant increased. • In social infrastructure business, sales of steel pipes for civil engineering works increased. • In pipe‐related business, sales of ductile iron pipes to the Middle East and construction business increased. Overseas • In environmental business, sales of wastewater treatment plant (Johkasou) increased. • In social infrastructure business, sales of industrial castings increased. (Financial results for the year ended December 31, 2018) 5

Operating Profit Year ended Year ended Changes （ Unit: billions of yen ） Dec. 31, 2018 Dec. 31, 2017 ％ ％ ％ Amount Amount Amount Operating profit 189.3 200.0 ‐10.6 10.2 11.4 ‐5.3 Factors affecting operating profit (YoY change ‐10.6 billion yen) 1.Fluctuation in exchange rates US$ (112→110) ‐3.0 billion yen Euro (127→130) +3.0 billion yen +6.0 billion yen Other currencies +0.0 billion yen 2.Foreign exchange gain/loss ‐6.7 billion yen 3.Material Machinery ‐8.5 billion yen ‐13.0 billion yen Water ‐4.5 billion yen 4.Change in sales incentive ratio U.S. : ‐6.6 billion yen, China: ‐1.3 billion yen etc. ‐6.6 billion yen Cost of goods sold 5.Personnel expenses ‐2.4 billion yen ‐8.3 billion yen SG&A expenses ‐5.9 billion yen 6.Impact of increased sales +36.0 billion yen 7.Other ‐15.0 billion yen (Financial results for the year ended December 31, 2018) 6

Operating Profit by Reportable Segment （Unit: billions of yen） Year ended Dec. 31, 2018 Year ended Dec. 31, 2017 Changes 1,527.6 1,436.5 +91.1 Revenue 200.9 200.7 +0.1 Operating profit Machinery OP margin 13.2% 14.0% ‐0.8P 292.3 285.7 +6.6 Revenue 19.9 24.4 ‐4.5 Operating profit Water OP margin 6.8% 8.5% ‐1.7P 30.4 28.9 +1.5 Revenue 3.0 3.0 +0.0 Operating profit Other OP margin 9.9% 10.4% ‐0.5P Adjustment Operating profit ‐34.5 ‐28.2 ‐6.2 1,850.3 1,751.0 +99.3 Revenue 189.3 200.0 ‐10.6 Operating profit Total OP margin 10.2% 11.4% ‐1.2P (Financial results for the year ended December 31, 2018) 7

Finance Income/ Finance Costs (Net) Year ended Year ended （ Unit: billions of yen ） Changes Dec. 31, 2018 Dec. 31, 2017 7.9 14.1 ‐6.1 Finance income/ finance costs (‐) 7.1 6.5 +0.6 Interests and dividends ‐ 8.4 ‐8.4 Gain on sales of securities * 0.8 ‐0.8 +1.7 Other Gain (loss) on sales of securities is no longer recorded in the consolidated * statement of profit or loss from the fiscal year ended December 31, 2018 due to the adoption of IFRS 9. (Financial results for the year ended December 31, 2018) 8

Profit Before Income Taxes/ Profit for the Year Year ended Year ended Changes （ Unit: billions of yen ） Dec. 31, 2018 Dec. 31, 2017 ％ ％ ％ Amount Amount Amount 197.2 214.0 ‐16.8 Profit before income taxes 10.7 12.2 ‐7.8 ‐49.1 ‐73.2 +24.1 Income tax expenses (Effective tax rate) (24.9%) (34.2%) Share of profits of investments accounted 2.0 2.5 ‐0.4 for using the equity method 150.1 143.3 +6.8 Profit for the year 8.1 8.2 +4.8 Profit attributable to: 138.6 134.2 +4.4 Owners of the parent 7.5 7.7 +3.3 11.6 9.1 +2.4 Noncontrolling interests 0.6 0.5 +26.4 Year ended Year ended Changes Dec. 31, 2018 Dec. 31, 2017 Dividends 34 yen 32 yen +2 yen (Per share) * 30 % 30 % +1 point Payout ratio Retirement of treasury shares 2.9 13.2 ‐10.3 (Billion yen) * Shareholder return ratio 32 % 39 % ‐7 point (Dividends and retirement of treasury shares) *Payout ratio and Shareholder return ratio in the year ended Dec. 31, 2017 is calculated based on the profit in accordance with IFRS. Kubota Corp. retired 1,500,000 of treasury shares in December 2018. (Financial results for the year ended December 31, 2018) 9

Shareholder Return History Nine months Total of Year ended Year ended Year ended Year ended (Unit: billions of yen) ended Changes last 4 years Mar. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2015 and 9 months U.S. GAAP IFRS 139.5 110.1 132.5 136.4 138.6 + 2.2 657.2 Profit attributable to owners of the parent (Per share) (111.68yen) (88.47yen) (106.58yen) (110.30yen) (112.44yen) (+2.14yen) 34.9 34.9 37.3 39.5 41.9 + 2.4 188.5 Total amount of dividend paid (Dividend per share) (28yen) (28yen) (30yen) (32yen) (34yen) (+ 2yen) 7.7 2.5 6.0 13.2 2.9 ‐ 10.3 32.3 Retirement of treasury shares (Number of shares retired) (4.0 mil. shares) (1.3 mil. shares) (3.8 mil. shares) (7.1 mil. shares) (1.5 mil. shares) (‐ 5.6mil. shares) 42.6 37.4 43.3 52.7 44.8 ‐ 8.0 220.8 Total shareholder return 25% 32% 28% 29% 30% + 1P 29% Payout ratio Shareholder return ratio ▲ 6P 31% 34% 33% 39% 32% 34% (Dividends and retirement of treasury shares) Dividend payout ratio: 30% as a target Purchase and retirement of treasury shares*: Carry out every year Shareholder return ratio: over 30% ＊ Continue share buy‐backs and prompt retirement of treasury shares. The proceed from sales of assets such as securities, is appropriated to the resource of share buy‐backs so as to control the balance of interest‐bearing debt. (Financial results for the year ended December 31, 2018) 10